2015: How will the housing market close out the year?

Canada’s biggest bank has released its forecast for home sales in 2015 – what can brokers expect for the rest of the year?

While certain markets are certainly taken a hit this year, other strong performers are helping boost the overall housing industry to impressive levels.

“Our forecast calls for home resales to rise by 5% to 505,400 units in Canada in 2015, which would constitute the second-highest level on record,” Robert Hogue, senior economist for RBC, writes in a recently released Canadian Housing Forecast. “We project home resales to fall significantly in Alberta and Saskatchewan; however, this would be more than offset by a very strong gain in British Columbia, and solid advances in Ontario and Quebec—largely reflecting developments to date.”

And that stellar market is reflected in broker business, with many – even those in smaller markets – reporting an uptick in volume this year.

Home prices, meanwhile, are expected to see an average increase of 4.6% year-over-year.
“Our forecast calls for price gains in all provinces in 2015 except Saskatchewan in 2015, although advances in Alberta and the Atlantic region are forecasted to be slim,” Hogue writes. “We expect stronger price gains to be registered in Ontario and British Columbia.”

According to RBC, there are two risks that currently threaten the Canadian economy: Further oil price shocks and condo overbuilding in Toronto.

Still, it remains optimistic and that the worst economic shocks are behind us.

“Looking ahead to the rest of this year, we expect the risk events that unfolded in the first half of 2015 to stay in the picture but believe that they will not intensify,” Hogue writes. “We project growth in the Canadian economy to resume, and expect that housing (condo) completions will stay well below the extremely high levels recorded in the first quarter of this year—in fact, the spike in completions had already run its course by the second quarter.”

RBC expects sales to dip slightly in 2016 to 501,800 units due to an expected hike in interest rates. However, Alberta and Saskatchewan – two markets that performed sluggishly in 2015 – are expected to rebound next year.